Nova Scotia ordered to disclose management fees it pays for company to operate Yarmouth Ferry

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Nova Scotia ordered to disclose management fees it pays for Yarmouth Ferry
WATCH: Nova Scotia ordered to disclose management fees it pays for Yarmouth Ferry – Feb 16, 2021

Nova Scotia has been ordered to disclose what amount of the millions of dollars in public funds are paid to a ferry service are deemed a management fee for the operator.

The management fee represents the guaranteed profit made by Bay Ferries Ltd., for operating the ferry between Yarmouth, N.S., and Bar Harbor, Maine.

It’s a fee paid out whether or not the ferry service runs and is of particular interest to Nova Scotia Progressive Conservative Leader Tim Houston, the applicant of the lawsuit, with the recent announcement that the Yarmouth Ferry, commonly known as the CAT ferry, would not be operating for a third straight season.

Houston told media on Tuesday that the decision validates the party’s concerns over government transparency.

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“This is a victory for the taxpayers and victory for the little person because most people don’t have the resources, the time, the energy, the ability to take the government to the Supreme Court,” he said.

“Now everyone has a right to know what the management fee is and so they should because it’s taxpayer money.”

The province’s Transportation and Infrastructure Renewal (TIR) department as well as Bay Ferries, has insisted that the fee is confidential information that could potentially harm the financial interests of the government if disclosed.

But on Tuesday, Nova Scotia Supreme Court judge Richard Coughlan handed down a decision that found the evidence put forward to the court “does not establish more than a mere possibility” that the disclosure would harm the province.

“I am unable to find the evidence demonstrates disclosure will result in a risk of harm to [Bay Ferries] competitive position or interfere with its negotiating position,” Coughlan wrote in his decision.
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Coughlan said the terms of the funding agreement do not require the province to keep the management fee confidential, adding that it should be made public under the provisions of Nova Scotia’s Freedom of Information and Protection of Privacy (FOIPOP) Act.

As a result, the province has been ordered to disclose the management fee.

The judge said he would keep the management fee details sealed for 30 days, the period during which either side can file an appeal.

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Years-long court fight

Tuesday’s decision is the latest step in a legal process that has lasted years.

The CAT ferry is operated by Bay Ferries as part of a 10-year deal with the Nova Scotia government made back in 2016.

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As part of the deal, the province agreed to cover any cash deficiency the company incurs for the year, as well as a management fee and any bonus, should the ferry perform better than expected. But the price tags for the management fee and a possible bonus were kept secret.

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As a result, three groups — including Marieke Walsh, then a reporter with Global News — requested the financial information that TIR had refused to provide under the province’s Freedom of Information and Protection of Privacy Act in the spring of 2016.

But the government refused, saying it could harm the financial or economic interests of Bay Ferries to do so and could also create a competitive disadvantage for the company.

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Bay Ferries also objected to the release of the information.

The government said the disclosure of the management fee could harm Bay Ferries’ ability to negotiate a move to Bar Harbor or allow competitors to have an advantage at the negotiation table.

But the Office of the Information and Privacy Commissioner (OIPC) disagreed.

“There is no evidence to reasonably conclude that by knowing what the operation costs and management fee the province is paying now could realistically assist a competitor in devising a bid in the future,” then-privacy commissioner Catherine Tully wrote in her report recommending that the government release the fees.

Tully also said the management fee paid to Bay Ferries for two other ferry contracts is already publicly available and that the practice of publishing management fees “does not appear to be that uncommon.”

The Nova Scotia government chose to ignore the recommendation made by Tully, whose office has no power to make the government comply.

Houston and the PC caucus filed a court application to enforce the decision a short time later in February 2019.

Nova Scotia Progressive Conservative Leader Tim Houston takes questions from reporters, Wednesday, June 24, 2020 outside the provincial legislature in Halifax as party education critic Tim Halman looks on. THE CANADIAN PRESS/Keith Doucette. THE CANADIAN PRESS/Keith Doucette.

A win for the little guy

On Tuesday, Houston called the court’s decision a win for the little guy, who would not typically have the resources or knowledge to go to court in order to fight the government.

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He called on premier-designate Iain Rankin to accept the decision and disclose the information without delay.

“People have a right to know this. It’s only the government that wanted to keep it hidden and everyone else knows it should be out there” said Houston.

“No more games, just be open with Nova Scotia and be transparent about the deal.”

READ MORE: COVID concerns — Nova Scotia cancels Yarmouth-Maine ferry service for 2020

Houston described the decision on whether to appeal as an early test on Rankin while slighting the Liberal Leader’s predecessor in current Premier Stephen McNeil.

“This is a very secretive government, probably the least transparent government that this province has ever seen. So this is an early test out of the gates to see if there has really been a change,” said Houston.

Bay Ferries told Global News in an email that it is studying the court’s decision and will not make any further comment at this time.

A spokesperson for TIR said they’d be reviewing the decision in consultation with Bay Ferries.

On Tuesday, Premier Stephen McNeil said it would be a decision made by Rankin.

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Houston commits to changing FOIPOP

Houston, who will now gear-up for an election that will need to be called at the latest by Spring 2022, expressed a commitment to change legislation around government transparency if his party forms governments.

On Tuesday, he said the party would look to provide the OIPC with order-making power in order to avoid the necessity of lawsuits like this in the future.

“I believe the privacy commissioner has a job to do in the interest of taxpayers and that they should be able to do that job. That includes order-making ability,” he said.

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